S.A. Builders Ltd. v. CIT

288 ITR 1Supreme Court of India2007#26 most cited

What is S.A. Builders Ltd. v. CIT authority for?

Interest paid on borrowed funds cannot be disallowed merely because the assessee made interest-free advances, provided those advances were made for business purposes and commercial expediency. The Revenue cannot dictate a businessman's commercial decisions, but the assessee bears the onus to prove the business expediency.

1,484

judgments rely on this decision, according to BharatTax’s citation analysis of 367,154 Indian tax judgments — from 2008 to 2026.

Also referred to as

S.A. Builders Ltd. v. CIT · 288 ITR 1 · Section 36(1)(iii) · commercial expediency · business expediency · interest-free advances · disallowance of interest · onus to prove business purpose · borrowed funds · Revenue interference

Also reported as

158 Taxmann 74158 Taxmann.com 74

Sections most often in play

Section 143(3)Section 36(1)(iii)Section 14ASection 1961Section 148Section 147Section 40(a)(ia)Section 142(1)
Read the full judgment

Issues it is cited on

commercial expediencyinterest free advancessection 36(1)(iii)business expediencydisallowance of interest expendituresection 36(1)section 36revenue expendituresection 37(1)section 37capital expendituresection 14a

Judgments citing S.A. Builders Ltd. v. CIT

Sanjay Trade Corporation, Mumbai vs. ITO 13(3)(1), Mumbai

In the result, the appeals filed by the assessee firm in ITA N0

ITA 4969/MUM/2012[2009-10]Status: DisposedITAT Mumbai03 Mar 2016AY 2009-10

Bench: Shri Saktijit Dey & Shri Ramit Kocharआयकर अपील सं./I.T.A. No. 8271/Mum/2011 ("नधा"रण वष" / Assessment Year : 2008-09) आयकर अपील सं./I.T.A. No. 4969/Mum/2012 ("नधा"रण वष" / Assessment Year : 2009-10)

For Respondent: Shri Rakesh Ranjan
Section 143(2)Section 143(3)Section 36(1)(iii)

…t the said funds were advanced out of commercial expediency or that such funds were not advanced out of interest bearing loans taken by the assessee firm. The CIT(A) relied on the decision of the Hon'ble Supreme Court in the case of S. A. Builders reported in 288 ITR 1(SC) and held that the action of the AO of disallowing the interest is held to be justified. The assessee firm has also made a without prejudice submission wherein it has been contended that the opening capital account of the partner was Rs. 3,75,03,204/- and the assessee firm had given interest free loans of Rs. 4,86,96,890/- to the sister concern,…

Sanjay Trade Corpn, Mumbai vs. A.C.I.T. 13(3), Mumbai

In the result, the appeals filed by the assessee firm in ITA N0

ITA 8271/MUM/2011[2008-09]Status: DisposedITAT Mumbai03 Mar 2016AY 2008-09

Bench: Shri Saktijit Dey & Shri Ramit Kocharआयकर अपील सं./I.T.A. No. 8271/Mum/2011 ("नधा"रण वष" / Assessment Year : 2008-09) आयकर अपील सं./I.T.A. No. 4969/Mum/2012 ("नधा"रण वष" / Assessment Year : 2009-10)

For Respondent: Shri Rakesh Ranjan
Section 143(2)Section 143(3)Section 36(1)(iii)

…t the said funds were advanced out of commercial expediency or that such funds were not advanced out of interest bearing loans taken by the assessee firm. The CIT(A) relied on the decision of the Hon'ble Supreme Court in the case of S. A. Builders reported in 288 ITR 1(SC) and held that the action of the AO of disallowing the interest is held to be justified. The assessee firm has also made a without prejudice submission wherein it has been contended that the opening capital account of the partner was Rs. 3,75,03,204/- and the assessee firm had given interest free loans of Rs. 4,86,96,890/- to the sister concern,…

M/S. Gujarat Glass Ltd vs. The Addl CIT RG 6(3)

In the result, appeals are allowed in part, in terms indicated hereinabove

ITA 9645/MUM/2004[2001-2002]Status: DisposedITAT Mumbai02 Mar 2016AY 2001-2002
For Appellant: Shri Yogesh A.TharFor Respondent: Shri Peeyush Sonkar
Section 143(3)

…e also found that investment was made in the share of company with a similar line of business and for commercial expediency, therefore, no disallowance was warranted u/s.36(1)(iii), in view of the decision of Hon’ble Supreme Court in the case of S.A.Builders, 288 ITR 1. Accordingly, the AO is directed to allow the claim of the assessee for depreciation. 9. The assessee is also aggrieved for disallowance of interest at estimated cost of borrowing on the amount given to sister concerns and directors amounting to Rs.99,49,264/-. This ground relates to the action of the AO in estimating the cost of borrowing at 13% a…

M/S Mission Row Tea Brokers Pvt Ltd, Kolkata vs. D.C.I.T Cir - 4, Kolkata

In the result the appeal of the assessee is allowed

ITA 855/KOL/2013[2007-08]Status: DisposedITAT Kolkata02 Mar 2016AY 2007-08

Bench: Hon’Ble Shri N.V.Vasudevan, Jm & Shri M.Balaganesh, Am] Assessment Year : 2007-08

For Appellant: Shri Subash Agarwal, Advocate

…IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH “A”, KOLKATA [Before Hon’ble Shri N.V.Vasudevan, JM & Shri M.Balaganesh, AM] Assessment Year : 2007-08 M/s. Mission Row Tea Brokers -versus- D.C.I.T., Circle-4, Pvt.Lt, Kolkata Kolkata (PAN:AABCM7986R) (APPELLANT ) (RESPONDENT) For the Appellant : Shri Subash Agarwal, Advocate For the Respondent Shri Debasish Lahiri, JCIT, Sr.DR Date of Hearing : 18.02.2016. Date of Pronouncement : 02.03.2016. ORDER Per Shri N.V.Vasudevan, JM This is an appeal by the Assessee directed against the order dated 27.02.2013 of CIT(A)-IV, Kolkata relating to A.Y.2007-08. 2. The only i…

Sitson India P.Ltd, Thane vs. DCIT Cir 1, Kalyan

In the result, Department’s appeal is dismissed

ITA 5096/MUM/2013[2009-10]Status: DisposedITAT Mumbai29 Feb 2016AY 2009-10

Bench: Shri Saktijit Dey & Shri Ramit Kochar

For Appellant: Shri Jitendra JainFor Respondent: Shri Sunil Kumar Agarwal
Section 10Section 14ASection 2Section 36(1)(iii)

…IN THE INCOME TAX APPELLATE TRIBUNAL “E” BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA no.5096/Mum./2013 (Assessment Year : 2009–10) Sitson India Ltd. W–76, MIDC Phase–II ……………. Appellant Dombivli (E), Thane 421 204 PAN – AADCS9489D v/s Dy. Commissioner of Income Tax–I Mohan Pride, Khadapada ……………. Respondent Kalayan (W), Thane 421 301 ITA no.5386/Mum./2013 (Assessment Year : 2009–10) Asstt. Commissioner of Income Tax–I Mohan Plaza, Khadapada ……………. Appellant Kalayan (W), Thane 421 301 v/s Sitson India Ltd. W–76, MIDC Phase–II ……………. Respondent Dombivli (E)…

The Karnataka State Co-Operative Apex Bank Ltd, Bangalore vs. Deputy Commissioner of Income Tax, Bangalore

In the result, grounds of appeal Nos

ITA 1372/BANG/2014[2007-08]Status: DisposedITAT Bangalore29 Feb 2016AY 2007-08

Bench: Shri Vijay Pal Rao & Shri Inturi Rama Raothe Karnataka State Co-Operative Apex Bank Ltd., ‘Uthunga’, No.1, Pmk Road, Chamarajpet, Bangalore-560018. … Appellant Pan:Aabat 0269 J Vs. Deputy Commissioner Of Income-Tax, Circle 3(1), Bangalore. … Respondent

For Appellant: Shri Bharath L, CAFor Respondent: Shri Sanjay Kumar, CIT(DR)
Section 143(1)Section 143(2)Section 143(3)Section 147Section 148Section 28

…IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH, BANGALORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER and SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER The Karnataka State Co-operative Apex Bank Ltd., ‘Uthunga’, No.1, PMK Road, Chamarajpet, Bangalore-560018. … Appellant PAN:AABAT 0269 J Vs. Deputy Commissioner of Income-tax, Circle 3(1), Bangalore. … Respondent Appellant by : Shri Bharath L, CA. Respondent by : Shri Sanjay Kumar, CIT(DR). Date of hearing : 03/02/2016 Date of pronouncement : 29/02/2016 O R D E R Per INTURI RAMA RAO, AM : This appeal filed by the assessee-co-operative bank, is directed against the ord…

Uma Dutt Paliwal Prop., Panipat vs. Addl. CIT, Panipat

In the result appeal of the assessee is allowed

ITA 4626/DEL/2011[2008-09]Status: DisposedITAT Delhi23 Feb 2016AY 2008-09

Bench: Shri J. Sudhakar Reddy & Sh. Sudhanshu Srivastavaay: 2008-09 Uma Dutt Paliwal, Vs Addl. Cit, Prop. Paliwal Home Furnishing, Karnal. Panipat. (Appellant) (Respondent) Appellant By: Shri Gurjeet Singh, Ca Respondent By: Shri O.P.Meena, Sr. Dr

For Appellant: Shri Gurjeet Singh, CAFor Respondent: Shri O.P.Meena, Sr. DR
Section 36(1)(iii)Section 50C

…home furnishings has invested Rs.1.00 lac in a college being set up by the textile exporters to give Bachelor Degree in Textile Engineering. If one applies the principles of law enunciated by the Hon'ble Apex Court in the case of S.A. Builders Ltd. vs CIT 288 ITR 1(S.C.) it will be seen that the case of the assessee is covered by the ratio of the judgment of the Hon'ble Apex Court. As per the Hon'ble Apex Court, what is to be seen is the purpose for which the money is utilised. If the money is utilised in a way that makes I.T.A. No. 4626/Del/2011 Assessment year 2008-09 commercial sense and helps in runni…

ACIT, Chennai vs. Sun Tv Net Work Ltd., Chennai

In the result, all the three appeals of the Revenue are

ITA 1579/CHNY/2015[2011-12]Status: DisposedITAT Chennai19 Feb 2016AY 2011-12

Bench: Shri N.R.S. Ganesan & Shri A. Mohan Alankamony

For Appellant: Sh. N. Devanathan, AdvocateFor Respondent: Ms. Jayanthi Krishnan, CIT
Section 37

…is that the assessee has invested the available interest-free funds in share capital and mutual funds. Furthermore, making investment in sister concerns is for commercial expediency in view of the judgment of Apex Court in S.A. Builders Ltd. v. CIT (2007) 288 ITR 1. It is not the case of the Revenue that the sister concern or any of the Directors has misused the funds invested by the assessee. When the sister concern uses the funds only for business purpose, there was commercial expediency for making investment. Therefore, this Tribunal is of the considered opinion that there cannot be any disallowance und…

ACIT, Chennai vs. Sun Tv Net Work Ltd., Chennai

In the result, all the three appeals of the Revenue are

ITA 1578/CHNY/2015[2010-11]Status: DisposedITAT Chennai19 Feb 2016AY 2010-11

Bench: Shri N.R.S. Ganesan & Shri A. Mohan Alankamony

For Appellant: Sh. N. Devanathan, AdvocateFor Respondent: Ms. Jayanthi Krishnan, CIT
Section 37

…is that the assessee has invested the available interest-free funds in share capital and mutual funds. Furthermore, making investment in sister concerns is for commercial expediency in view of the judgment of Apex Court in S.A. Builders Ltd. v. CIT (2007) 288 ITR 1. It is not the case of the Revenue that the sister concern or any of the Directors has misused the funds invested by the assessee. When the sister concern uses the funds only for business purpose, there was commercial expediency for making investment. Therefore, this Tribunal is of the considered opinion that there cannot be any disallowance und…

ACIT, Chennai vs. Sun Tv Net Work Ltd., Chennai

In the result, all the three appeals of the Revenue are

ITA 1577/CHNY/2015[2005-06]Status: DisposedITAT Chennai19 Feb 2016AY 2005-06

Bench: Shri N.R.S. Ganesan & Shri A. Mohan Alankamony

For Appellant: Sh. N. Devanathan, AdvocateFor Respondent: Ms. Jayanthi Krishnan, CIT
Section 37

…is that the assessee has invested the available interest-free funds in share capital and mutual funds. Furthermore, making investment in sister concerns is for commercial expediency in view of the judgment of Apex Court in S.A. Builders Ltd. v. CIT (2007) 288 ITR 1. It is not the case of the Revenue that the sister concern or any of the Directors has misused the funds invested by the assessee. When the sister concern uses the funds only for business purpose, there was commercial expediency for making investment. Therefore, this Tribunal is of the considered opinion that there cannot be any disallowance und…

Sun Tv Network Limited, Chennai vs. ACIT, Chennai

In the result, all the three appeals of the Revenue are

ITA 1341/CHNY/2015[2011-2012]Status: DisposedITAT Chennai19 Feb 2016AY 2011-2012

Bench: Shri N.R.S. Ganesan & Shri A. Mohan Alankamony

For Appellant: Sh. N. Devanathan, AdvocateFor Respondent: Ms. Jayanthi Krishnan, CIT
Section 37

…is that the assessee has invested the available interest-free funds in share capital and mutual funds. Furthermore, making investment in sister concerns is for commercial expediency in view of the judgment of Apex Court in S.A. Builders Ltd. v. CIT (2007) 288 ITR 1. It is not the case of the Revenue that the sister concern or any of the Directors has misused the funds invested by the assessee. When the sister concern uses the funds only for business purpose, there was commercial expediency for making investment. Therefore, this Tribunal is of the considered opinion that there cannot be any disallowance und…

Sun Tv Network Limited, Chennai vs. ACIT, Chennai

In the result, all the three appeals of the Revenue are

ITA 1340/CHNY/2015[2010-2011]Status: DisposedITAT Chennai19 Feb 2016AY 2010-2011

Bench: Shri N.R.S. Ganesan & Shri A. Mohan Alankamony

For Appellant: Sh. N. Devanathan, AdvocateFor Respondent: Ms. Jayanthi Krishnan, CIT
Section 37

…is that the assessee has invested the available interest-free funds in share capital and mutual funds. Furthermore, making investment in sister concerns is for commercial expediency in view of the judgment of Apex Court in S.A. Builders Ltd. v. CIT (2007) 288 ITR 1. It is not the case of the Revenue that the sister concern or any of the Directors has misused the funds invested by the assessee. When the sister concern uses the funds only for business purpose, there was commercial expediency for making investment. Therefore, this Tribunal is of the considered opinion that there cannot be any disallowance und…

M/S. International Clearing & Shipping Agency, Chennai vs. Additional CIT, Chennai

In the result, the appeal of the Department and Assessee are partly allowed for statistical purpose

ITA 2209/CHNY/2010[2007-08]Status: DisposedITAT Chennai11 Feb 2016AY 2007-08

Bench: Shri Chandra Poojari & Shri G. Pavan Kumarआयकर अपील सं./I.T.A. No.2209/Mds/2010 "नधा"रण वष" /Assessment Year : 2007-2008. M/S. International Clearing Vs. The Additional Commissioner Of Shipping Agency, Income Tax, Old No.158, New No.325, Business Range-Viii, Linghi Chetty Street, Parrys, Chennai Chennai 600 001. [Pan Aaafi 0178B ]

For Appellant: Shri. R. Vijayarghavan, AdvocateFor Respondent: Dr. Nischal, IRS, JCIT
Section 143(2)Section 143(3)Section 37

…emand report satisfied that the assessee is having adequate credit balance in Capital Accounts and the interest payments to bank are on HP loans disbursed directly to the dealers and relied on the decision of Apex Court in the case of S.A. Builders vs. CIT 288 ITR 1, where it is held that the interest on borrowed funds advanced in the course of business cannot be disallowed and also supported with High Court decision in the case of Hotel Savera vs. CIT 239 ITR 795 (Mad) and CIT vs. Reliance Utilities Industries & Powers Ltd. 313 ITR 340 (Bom) where it is held that if there is sufficient balance available in…

M/S. Rl Exports International, New Delhi vs. DCIT, New Delhi

In the result, the appeal filed by the assessee is, therefore, allowed

ITA 625/DEL/2013[2008-09]Status: DisposedITAT Delhi11 Feb 2016AY 2008-09

Bench: Shri N.K. Saini & Smt. Beena Pillai

Section 143(2)Section 143(3)Section 250

…d and interest received by the assessee on the respective loans and advances. The Hon’ble Supreme Court in the case of Hero Cycles (supra) has dealt with the expression “commercial expediency”. As defined in the case of S.A. Builders vs. CIT reported in 2007 (288 ITR 1) (SC) in the following manner: “26. The expression “commercial expediency” is an expression of wide import and includes such expenditure as a prudent businessman incurs for the purpose of business. The expenditure may not have been incurred under any legal obligation, but yet it is allowable as a business expenditure if it was incurred on grounds…

DCIT, New Delhi vs. M/S. A.K. Capital Services Ltd., New Delhi

In the result, both the appeals filed by the Revenue stand dismissed

ITA 1194/DEL/2014[2011-12]Status: DisposedITAT Delhi10 Feb 2016AY 2011-12

Bench: Shri H.S. Sidhu & Shri L.P. Sahu

For Appellant: Sh. Ved Jain, AdvFor Respondent: Sh. K.K. Jaiswal, DR
Section 143(1)Section 143(2)Section 143(3)

…the following judgments:- - CIT vs. Dalmia Cement (P) Ltd. 254 ITR 377 (Hon’ble Jurisdictional High Court) - Calcutta High Court – Ravi Marketing (P) Ltd. vs. CIT (2006) 280 ITR 519. - Apex Court decision in SA Builders vs. CIT {2006} 206 CTR (SC) 631; (2007) 288 ITR 1 (SC). In view of above, Ld. Counsel of the Assessee stated that addition made by the AO was rightly deleted by the Ld. CIT(A), hence, the same may be upheld. 9. We have heard both the parties and perused the paper book, case laws cited by the Ld. Counsel of the assessee in his written synopsis, assessment order and the order of the Ld. CIT(A).…

DCIT, New Delhi vs. M/S. A.K. Services Pvt. Ltd., New Delhi

In the result, both the appeals filed by the Revenue stand dismissed

ITA 1143/DEL/2014[2010-11]Status: DisposedITAT Delhi10 Feb 2016AY 2010-11

Bench: Shri H.S. Sidhu & Shri L.P. Sahu

For Appellant: Sh. Ved Jain, AdvFor Respondent: Sh. K.K. Jaiswal, DR
Section 143(1)Section 143(2)Section 143(3)

…the following judgments:- - CIT vs. Dalmia Cement (P) Ltd. 254 ITR 377 (Hon’ble Jurisdictional High Court) - Calcutta High Court – Ravi Marketing (P) Ltd. vs. CIT (2006) 280 ITR 519. - Apex Court decision in SA Builders vs. CIT {2006} 206 CTR (SC) 631; (2007) 288 ITR 1 (SC). In view of above, Ld. Counsel of the Assessee stated that addition made by the AO was rightly deleted by the Ld. CIT(A), hence, the same may be upheld. 9. We have heard both the parties and perused the paper book, case laws cited by the Ld. Counsel of the assessee in his written synopsis, assessment order and the order of the Ld. CIT(A).…

Aplab Ltd, Thane vs. ACIT RG 1, Thane

The appeal of the assessee is allowed

ITA 8545/MUM/2011[2008-09]Status: DisposedITAT Mumbai09 Feb 2016AY 2008-09
Section 36(1)(iii)

…ef was allowed in the first appeal. 6. We have heard the rival submissions and perused the relevant material on record. The learned A.R. has heavily relied on the judgment of the Hon’ble Supreme Court in the case of S.A.Builders Ltd.Vs. CIT(A) & Anr. [(2007) 288 ITR 1 (SC)] to buttress his submission that the interest be allowed as deduction as the advance was given to its subsidiary companies. However no material was placed on record to indicate as to how such amount was utilized by the sister concerns. 4 M/s APLAB Ltd. 7. The assessee in the case before the Hon’ble Summit court in S.A.Builders Ltd. (supra) t…

M/S. Paliwal Infrastructure (P) Ltd., New Delhi vs. ACIT, New Delhi

In the result, appeals of the assessee are allowed

ITA 1978/DEL/2011[2007-08]Status: DisposedITAT Delhi08 Feb 2016AY 2007-08

Bench: Sh. N. K. Saini, Am & Smt. Beena Pillai, Jm Ita Nos. 1978 & 1979/Del/2011 : Asstt. Years : 2007-08 & 2008-09 M/S Paliwal Infrastructure (P) Ltd. Vs Deputy Commissioner Of Income B-14, Greater Kailash-1, Tax, Circle-12(2), New Delhi Bangalore (Appellant) (Respondent) Pan No. Aabcr7764E Assessee By : Sh. Satish Kumar Goel, Adv. Revenue By : Smt. Rasmita Jha, Sr. Dr Date Of Hearing : 16.12.2015 Date Of Pronouncement : 08.02.2016 Order Per N. K. Saini, Am:

For Appellant: Sh. Satish Kumar Goel, AdvFor Respondent: Smt. Rasmita Jha, Sr. DR
Section 143(1)Section 80I

…54 ITR 148 and Union of India v. Azadi Bachao Andotan(2003) 263 ITR 706." Besides the above relevant para in the judgement there are two Paras extracted from Apex Court decision in- SA Builders Limited V. Commissioner of Income Tax(Appeals) and another (2007) 288 ITR 1, wherein the Hon'ble S.C. had agreed per decision of jurisdictional Delhi H.Court(CIT V. Dalmia Cement(Bharat) Limited 254 ITR 377. Sir, Para 31 & Para 32 SA Builders judgement(supra) stand extracted at Page 14 of Pb. & Hr. High Court case the copy of which as stated above is enclosed. These two paras read as- "31. We agree with the view taken by t…

M/S Kbd Sugars & Distilleries Ltd vs. ACIT

In the result, the appeals of the assessee for the Assessment Years 2008-

ITA 933/BANG/2013[2008-09]Status: DisposedITAT Bangalore05 Feb 2016AY 2008-09
For Appellant: Shri V. Chandrashekar, AdvocateFor Respondent: Mrs. Neera Malhotra,CIT (D.R)
Section 143(3)Section 14ASection 36(1)(iii)

…st-free advances made to the sister concerns in the instant case. It is also not the argument of the appellant that the interest-free advances were for any commercial expediency. Therefore, the decision of the Hon'ble Supreme Court in the case of SA Builders [288 ITR 1] is not applicable to the instant case. The AO relied on the following decisions i) Abhishek Industries [20S CTR 304 (P&H)] ii) Varinder Agro Chemicals Ltd. [20S CTR 304] iii) Doctor & Co. [180-ITR-627] 4.7 The Hon' ble Punjab & Haryana High' Court followed the decision in the case of Abhishek Industries Ltd. while giving decision in the Varinder…

ITO 2(3)(4), Mumbai vs. Walchand People First Ltd, Mumbai

In the result, appeal filed by the Revenue is dismissed

ITA 3527/MUM/2013[2009-10]Status: DisposedITAT Mumbai04 Feb 2016AY 2009-10

Bench: Shri Amit Shukla & Shri Ramit Kocharआयकर अपील सं./I.T.A. No. 2543/Mum/2013 ("नधा"रण वष" / Assessment Year : 2009-10)

Section 250

…the subsidiary company WTFL. The assessee company submitted that the assessee company has deep interest in its subsidiary company. In support, the assessee company relied on the decision of Hon’ble Supreme Court in the case of S.A. Builders Ltd. v. CIT (2007) 288 ITR 1 (SC). It was further submitted that the assessee company is a public limited company listed on the Bombay Stock Exchange, the directors had to perform certain management functions under various statutes/regulations, listing regulations under the SEBI Act and the mandatory corporate governance provisions etc, even though the DC-Business was transfer…